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Why Expedia’s Stock Fell after 4Q16 Earnings


Feb. 13 2017, Published 1:42 p.m. ET

4Q16 snapshot

Expedia (EXPE) released its fourth quarter and 2016 results on February 9, 2017, after the markets closed. The company beat analyst consensus revenue estimates, helped by higher gross bookings. However, it missed analysts’ earnings estimates due to higher-than-expected expenses.

Revenues rose 22.9% year-over-year or YoY to $2.09 billion. This was $20 million lower than analyst estimates of $2.07 billion revenues for 4Q16. Expedia reported an adjusted profit of $182.9 million, which translates to a $1.17 in adjusted earnings per share for the quarter, 14.5% lower than analyst estimates of $1.37 earnings per share.

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Stock movement

On Friday, February 10, 2017, the day after Expedia reported results, the stock was down 0.49%, closing at $122.65. This was after a 3% decline in Expedia in after-market hours trading on February 9, 2017. Expedia’s earnings miss, lackluster Trivago IPO performance, and investors’ fear about Expedia lacking behind the competitive landscape were the reasons for the stock’s decline.

However, year-to-date or YTD as of February 10, 2017, Expedia stock gained almost 8.3%. EXPE’s rival Priceline (PCLN) is up 12.3% YTD. TripAdvisor (TRIP) has also gained 12.1% YTD and Ctrip.com (CTRP) has gained 11.2% YTD. The broader market, tracked by the S&P 500 ETF (SPY), is up 3.6%.

Series overview

In this series, we’ll look at Expedia’s 4Q16 and full year 2016 performance. We’ll analyze key metrics trends and also look at management’s guidance for 2017. We’ll also check analyst estimates for EXPE, finally wrapping up the series with a discussion of valuation multiples.


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